As we all know to purchase a property there has to be a minimum down payment of 5% of the purchase price. This can come from a few sources. There are a few lenders that still have a 5% cashback program which can be used for the down payment. The interest rate is generally at a 5 year posted rate but makes purchasing a home for someone who currently rents helps them achieve home ownership much faster than they can generally save for the down payment.
You can have the down payment gifted from an immediate family member. There must be a letter from the donor demonstrating the funds are a genuine gift and are not required to be paid back.
You can also access the RRSP (Home Buyer Plan). Under the Home Buyer Plan, you may be eligible to withdraw up to $25,000 tax free from your RRSP to use as a down payment. You can also withdraw an additional $25,000 from a spousal or common-law RRSP. The money borrowed from the RRSP will need to be repaid over a period of 15 years after a 2 year grace period. If the cash is not paid back in a particular year it will form part of the client’s income for that tax year. Neither the applicant or their spouse cannot have owned property in the 5 years prior to withdrawing money from their RRSP. A written agreement to buy or build a home is required to withdraw any funds and it must be a primary residence.
Home ownership is one of the best investments one can make. If acquiring a down payment to purchase one is something you struggle with, give us a call and let us see whether the cash back program could help you get into a home today.